What best describes a sole trader?

• A. A business owned and operated by one person
• B. A business owned by two or more people
• C. A corporation with limited liability
• D. A nonprofit organization

Answer: (A)

A sole trader is a business owned and operated by one person. This means the owner makes all the decisions, keeps the profits, and is personally responsible for the business’s debts. It’s different from a partnership, which is owned by two or more people; from a corporation, which is a separate legal entity with limited liability; and from a nonprofit, which is set up to pursue a not-for-profit purpose.